The share prices of the country's major banks are also performing strongly.

It coincides with new evidence that bank funding costs have eased in recent months, making it possible for the banks to pass on more of any official cuts to the cash rate.

Finance reporter David Taylor has more.

DAVID TAYLOR: The latest figures show it's now easier to do business in Australia.

Recent interest rate cuts by the Reserve Bank, and some level of stability on global financial markets, have helped.

And according to one analyst, the cost for banks to source funds has fallen.

Life for the banks in recent months, says CLSA's Brian Johnson, has become easier.

BRIAN JOHNSON: Of the four factors that drive lending spreads, one of them is increasingly a positive, and that number has come down a long way. It's come down from 190 basis points in November now to be 70.

That is a pretty significant move, but we should not lose sight of the fact that there are other forces at play, but it's certainly better than it was three months ago.

DAVID TAYLOR: Those other forces at play include the costs banks pay for customer deposits.

Steven Munchenberg is the chief executive of the Australian Bankers' Association.

STEVEN MUNCHENBERG: Well look, the issue for us at the moment is simply deposits.

The banks are under a lot of pressure from regulators and from the market to increase their deposits, to reduce their exposure to overseas funding which of course was what was driving funding costs and concerns a few years ago.

So that is making it harder for banks.

So look, it is more difficult for banks today than it has been in the past. They're having to work harder and they're having to work smarter.

DAVID TAYLOR: Well, can you give me some figures about how much deposits have gone up and how much funding costs have gone down?

STEVEN MUNCHENBERG: Well look, since the beginning of the GFC, mortgages have increased relative to the cash rate - the Reserve Bank's cash rate - about 150 basis points, 1.5 per cent.

Deposits have increased by around two per cent, so deposits have gone up significantly more relative to the cash rate than mortgages have, and those pressures remain.

This is primarily being driven by the price we are paying for customer deposits, which now make up over two thirds of Westpac's funding.

DAVID TAYLOR: Brian Johnson says he agrees the competition between the banks for deposits remains high, but he says wholesale funding costs have eased enough to ensure the big four banks could pass on the next official cash rate cut in full.

BRIAN JOHNSON: Certainly, at the moment, there is a strong argument that if we see the next interest rate cut, perhaps that should be passed all on to borrowers.

DAVID TAYLOR: How much of that interest rate cut should be passed on?

BRIAN JOHNSON: Well, I think there's a fair argument that if these conditions hold - and we've seen them rally before and then fade away - but if it holds and the RBA (Reserve Bank of Australia) cuts by another 25 basis points, I would have thought there's a fair argument that you should see all of that flow through to mortgage borrowers.

DAVID TAYLOR: He says at the moment, banks are simply leaning towards the interests of shareholders rather than borrowers.

BRIAN JOHNSON: If you have a look at it, there's only three people you've ever got to worry about - staff, shareholders or customers.

And certainly to date, a lot of it has been skewed in favour of shareholders as opposed to the other two parties.

STEVEN MUNCHENBERG: No look, I don't agree with that.

If he's saying, simply asserting, that banks put shareholders ahead of other customers, I dispute that.

I think any bank that wants to stay successful needs to strike the balance between what its shareholders demand in terms of returns and what its other investors, including bond holders, demand in terms of return.

DAVID TAYLOR: PM contacted the Commonwealth Bank for comment, but received no response.